Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month. The electricity costs and hours of operation for past six months is listed below: Month Total hours of operation Total electricity cost $ 4,240 $ 4,400 $ 4,800 $ 4,200 $ 3,700 $ 3,600 650 January February 700 March 800 April May 600 550 June 500 Required: a) Use the high-low method to estimate the cost behaviour for the complex's electricity costs, assuming that the variable costs vary in proportion to the hours of operation. Express the total cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of operation? b) During July, the complex will open for 570 hours. Predict the complex's total electricity costs for July using the cost estimation method employed in above requirement a). c) What is the main drawback of the high-low method of cost estimation?

Brisbane Indoor Sports, a sporting complex, has opening hours that fluctuate from month to month. The electricity costs and hours of operation for past six months is listed below: Month Total hours of operation Total electricity cost $ 4,240 $ 4,400 $ 4,800 $ 4,200 $ 3,700 $ 3,600 650 January February 700 March 800 April May 600 550 June 500 Required: a) Use the high-low method to estimate the cost behaviour for the complex's electricity costs, assuming that the variable costs vary in proportion to the hours of operation. Express the total cost behaviour in formula form (Y = a + bx). What is the variable electricity cost per hour of operation? b) During July, the complex will open for 570 hours. Predict the complex's total electricity costs for July using the cost estimation method employed in above requirement a). c) What is the main drawback of the high-low method of cost estimation?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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